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Sunday, 22 October 2017

Cambridge is a fascinating place and on many measures one of
the most enterprising and entrepreneurial ecosystems in the world. The latest innovation
in numbers provides some useful facts and figures about both the University
and the wider Cambridge cluster. Over 60,000 people are employed in the
Cambridge cluster, which consists of over 4,700 knowledge intensive firms that
between them generate over £12 billion in total turnover. The innovation that
underpins the cluster is impressive - with 341 successful patents published per
100,000 residents (that's more than the next four cities in the UK combined).
The University employs over 11,000 people and educates around 19,000 students.
The five year survival rate of firms that are supported by Cambridge Enterprise
(the University's technology transfer company) is 64.6% - the national average
is 41.4%.

As Pro-Vice-Chancellor for Enterprise and Business Relations
I am in the privileged position of gaining a good overview of how this
enterprise ecosystem works. When I took up this new post six months ago, I was
aware of comments that the enterprise ecosystem in Cambridge is complex,
fragmented and difficult to navigate. The last six months has made me question
these comments and I would argue that there is a logic and coherence to the
enterprise ecosystem in Cambridge that is easy to explain and understand. What
makes the enterprise ecosystem work is that this structure exists, yet
constantly evolves. Let me explain.

If you want a good overview of the range of enterprise
related activities in Cambridge have a look at the University Enterprise
Network website. This site lists around 40 activities designed to support
enterprise at Cambridge. These activities fall into five broad categories
(shown in figure 1). The foundation is great people doing great projects.
People at all levels in the University are carrying out world leading research.
Students, post-docs, researchers and faculty are all involved in research
projects designed to push back the boundaries of knowledge. When these projects
produce new ideas and insights we have organisations like Cambridge Enterprise, designed to
help staff and students commercialise their expertise and ideas for the benefit
of the global community. Cambridge Enterprise will support staff and students
as they seek to identify how best to convert their ideas to reality. They will
provide IP protection when appropriate, help individuals undertake
consultancy for external organisations, protect and licence technologies and
invest seed funds in their new companies. As the firm grows and needs
additional finance they can approach Cambridge Innovation Capital,
which can provide series A and series B funding. If neither Cambridge
Enterprise or Cambridge innovation Capital proves to be the right route, others
such as the Cambridge Angels, Amadeus Capital Partners, Cambridge Capital Group, IQ Capital or the IP Group, can all provide support.
Together these organisations constitute the "finance and IP"
pillar.

Organisations don't just need capital they also need space
to grow, so the second pillar is "physical space". Again there
are multiple aspects to this. When you are first thinking of your business
model you could sit in your kitchen and develop your ideas or you could take a
desk in IdeaSpace. We have three
IdeaSpaces across the University - each provides space for a community of entrepreneurs
who can assist each other as they develop their ideas and business models.
Again, if the organisation is successful and starts to grow - there are
follow-on spaces around the city. St John's
innovation Centre or the Bradfield
Centre provide modular office space, that firms can use as they grow. The Babraham Research Campus provides space
for bio-medical firms - currently there are 60 firms on the Babarahm site, with
a waiting list of 40. If the organisation continues to grow they might move to
the Cambridge Science Park
and take office space there. In addition to office space, of course, there are other forms of space that matter. Makespace provide a community workshop where people can create prototypes. The local consultants, especially the technology consultants, provide prototyping and design support. Cambridge Consultants and The Technology Partnership have both played a crucial role in the ecosystem.

The third pillar concerns skills and capability development.
Departments and groups across the University run programmes and initiatives to
support entrepreneurs develop their organisations and their personal
capabilities. Lectures and networking is provided by Enterprise
Tuesday, a scheme run by the Judge
Business School which also runs Accelerate,
a start-up accelerator programe and Ignite,
an intensive one-week training programme for aspiring entrepreneurs and
corporate innovators to trial and prepare business ideas for the commercial
environment. The Maxwell Centre
runs Impulse, a
programme designed to help entrepreneurs translate their ideas into reality. Increasingly groups are seeking to run scale-up programmes, supporting innovative businesses as they seek to grow. The Judge Business School runs a scale-up programme in collaboration with Barclays, while Cambridge Network runs a school for scale-ups for local industry. As
with the space pillar there are multiple other programmes across the ecosystem
that I could include.

The final element is Connected Cambridge - the fact that multiple
networks exist across Cambridge designed to bring people together. If you are
interested in the Internet of Things then you would look to Cambridge Wireless. If you want
to connect with local businesses you would turn to the Cambridge Network. If you
wanted to support the successful long term growth of Cambridge, you would join Cambridge Ahead. Within the
University there are multiple student societies and associations - including CUE - Cambridge University Entrepreneurs, CUTEC - Cambridge University Technology and
Enterprise Club and EPOC -
Entrepreneurial Post-Docs of Cambridge. The point is that these and other
networks and initiatives all help bring the community together and support
people as they seek to make the right connections. In Cambridge it is
relatively easy to reach others - entrepreneurs, venture capitalists and
academics - because of the interconnected nature of the city and the
institutions it houses.

Figure 1: Overview of the Enterprise Ecosystem

The list I have provided is not meant to be exhaustive,
simply illustrative. But the first point is that the enterprise ecosystem works
in Cambridge because it covers all of the elements shown in figure 1. However,
there is more to the enterprise ecosystem in Cambridge than simply coverage of
these five elements. The second point is that people within the ecosystem
constantly innovate to improve the ecosystem. Whenever somebody spots a gap -
or a perceived gap - they try to fill it. We have a Makespace in Cambridge - a community workshop
where people can make and repair things. Entrepreneurs use this to create
prototypes for new products. Recently we launched a Biomakespace - in recognition of the need
for bio-prototyping facility. The Judge Business School runs a Social Venture Incubator, designed to help people
grow social ventures and partners with Cambridge Enterprise to support social ventures through a seed fund. Each of these new initiatives was launched to fill a
perceived gap in the enterprise ecosystem, but by filling this gap the
ecosystem becomes stronger. Indeed this constant innovation in the ecosystem
means that we are forever trying to make the enterprise ecosystem in Cambridge
better. We are constantly experimenting with ways of enhancing the ways in
which we work.

The third point - beyond coherence and experimentation - is
that now the level of enterprise activity in Cambridge has become
self-propagating. The fact that so many people are involved in enterprise,
entrepreneurship and innovation encourages others to participate. In turn this
makes Cambridge "a safe place to fail" - a phrase coined by one of
our local entrepreneurs, Andy Richards. The level of activity means that even
if your first venture fails, there will always be something else for you to go
and try, so in essence the enterprise ecosystem provides a safety net for those
who chose to get involved in it. All of these factors together are what makes
Cambridge such an interesting and welcoming place for enterprise.

Tuesday, 25 October 2016

The question of how UK
manufacturing will fare post-Brexit is often presented in the somewhat
simplified terms of a transactional relationship between UK manufacturers and
EU markets. ‘Leavers’ contend that because the EU sells more goods to the UK
than the UK sells to it, we will have the upper hand in negotiations. But
that position overlooks the nature of modern manufacturing, which today relies
on complex networks of companies, scattered across the globe, all dependent on
each other to produce finished goods and services.

In order to unpick how much
UK manufacturing depends on access to the EU Single Market we need to consider
the issue from three different but connected perspectives: the manufacturing
trade environment, the impact on foreign direct investment, and the importance
of manufacturing value chains and networks.

In terms of trade, the UK
has run a deficit since 1998, largely caused by a deficit in traded goods.
According to the Office of National Statistics, the 2015 deficit was around
6.9% of GDP, although this is partly offset by a surplus in services, resulting
in a balance of -2.1% of GDP. Clearly the devaluation of the pound in the
immediate aftermath of the EU referendum may have a positive impact on exports
- UK exports are currently around 20% cheaper than they were pre-referendum - which
makes UK goods more affordable and appealing to international markets. However,
the impact of this devaluation is likely to be short-lived. Already there is
evidence of inflationary pressure affecting imports used by UK manufacturers.
As price increases flow through supply chains, the cost of finished goods will
also increase, offsetting competitive advantage gained through a weak pound. In
the long term, the way to address the UK’s deficit is through trade - ensuring
that we export more than we import - and for that we require access to
international markets, both in Europe and beyond.

In recent years, the UK has
been very good at securing foreign direct investment, but the Japanese
Government, in its letter to the United Kingdom and European Union, challenged
any assumptions that this would continue untroubled by Brexit. The letter,
delivered just before the G20 meeting, was remarkably explicit, raising five
substantive issues that would deter future investment: uncertain trading
conditions, additional customs duties, inability to access services and make
financial transactions seamlessly across Europe, inability to access workforces
with the right skills, and the need to deal with different sets of regulations
and standards in the UK and the EU. The Japanese Government’s warning was
stark: “Japanese businesses with their European headquarters in the UK may
decide to transfer their head-office function to continental Europe if EU laws
cease to be applicable in the UK after its withdrawal”.

As commentators have noted,
the Japanese letter makes it clear that the UK is not just negotiating with the
EU over Brexit, but it also has to strike a deal that satisfies the
requirements of other international trade partners. Failure to do so will
isolate the UK further from the international community and runs the risk that
future foreign direct investment will be more difficult to secure.

The third issue is that of
global supply chains. Today’s manufacturers do not operate within the
boundaries of a single country. To describe a manufacturer as British –
in competition with, say, its US or German or Japanese counterparts – is
somewhat misleading. Competition in modern manufacturing takes place
between interdependent groups of firms, often from different countries, that
share knowledge and collaborate with one another to produce goods and deliver
services. Raw materials are typically sourced in one location, intermediate
inputs (such as parts and components) are produced in another and then exported
somewhere else for further processing and/or assembly into final products. And
it’s not just supply chains that function across boundaries: the
knowledge-intensive aspects of manufacturing such as R&D, design and
professional services are similarly geographically dispersed.

For manufacturers to be
competitive they need access to high quality production ‘inputs’. These inputs
include not only components, systems and specialised services but also workers,
finance and even infrastructure, many of which are imported from abroad. Data
from the OECD shows that a considerable proportion of UK exports rely on UK
manufacturers first bringing in inputs from abroad, processing them and then
exporting them. In 2011 the content of UK exports that had been
previously imported was around 23%, and that figure appears to be higher than
for the other major EU manufacturing economies.

Conversely, over half
(52.5%) of UK manufacturing domestic value added is driven by foreign final
demand, and a significant proportion of what the UK exports are not final
goods, but products and services that are further processed by another country
before reaching the consumer. Of the UK’s total exports of domestic value-added
in 2011, 63.7% were not final goods.

So the picture complex. The
assumption that the balance of trade deficit strengthens the UK's hand in
Brexit negotiations only holds if the factories using these imports are
confined to the UK. If the tariffs on importing intermediate goods become too
high, however, there may come a tipping point where it might be more
competitive to move some activities (and factories) to the EU.

While uncertainty remains
over what Brexit actually means, it is clear that the impact on manufacturing
will be significant. For manufacturing to thrive and prosper we need an
agreement with the EU that is open, transparent and enables international
trade, investment and knowledge to flow with ease. Anything less runs the risk
of damaging the long-term health of UK manufacturing.

Professor Andy Neely, Head
Institute for Manufacturing, University of Cambridge.Dr. Carlos López-Gómez,
Head of Knowledge Exchange, Policy Links, Centre for Science, Technology &
Innovation Policy (CSTI), University of Cambridge.

Saturday, 4 June 2016

So the UK's referendum on membership of the EU is fast approaching and I thought it about time I wrote a blog on why I'm voting for the UK to remain. The first reason is that fundamentally I am pro-Europe. I don't think the EU is perfect. There are clearly elements that need reform and there are valid questions of sovereignty, but I don't believe we have much hope of delivering meaningful reform if we exit and just shout from the sidelines. I was at a debate at the Royal Society recently on the impact of leaving the EU. The audience was overwhelmingly in favour of staying and one of the phrases that stuck in my mind was "corridor diplomacy". By leaving we'd be relegated to trying to have corridor conversations with those making decisions. It has to be better to be in the room where the discussion is taking place than standing in the corridor outside!

Second, I think the economic case is clear. The Brexit campaign continually quotes £350 million a week we give to
the EU, although when pushed they acknowledge that the net contribution
is actually significantly lower. The IfS - in their report - Brexit and the UK's Public Finances
- suggest that the UK's net contribution to the EU stands at around £8
billion (0.4% of national income or around £150 million per week). If we
stopped making this contribution we could reduce public spending by £8
billion a year (or divert that money elsewhere - to the National Health Service). Just to put things in perspective, public spending is forecast to be £801
billion in 2018-2019 (the year when the money would be available), so the
net effect of an extra £8 billion is relatively small - around 1% of public spending.

More importantly, however, is the other side of the argument. What would be the effect of Brexit on the UK economy? If the economy shrinks then tax receipts would fall and this could have a far greater impact on the economy and the public finances than the "saved" £8 billion. The IfS report reviews eight different studies examining the impact of Brexit on the economy - six of which forecast a negative impact (ranging from a 1.2 to 7.9% reduction in GDP). One group - Economists for Brexit - predicts a 4% growth in GDP, while the group other predicts the possibility of a small growth. The balance of evidence is that the economy is likely to shrink in the short term at least. A 0.6% reduction in GDP would wipe out the £8 billion savings.

While the economists can argue over their forecasts, my job brings me into contact with lots of different people. Inevitably a common topic of conversation is the referendum. The vast majority of people I talk to would err on the side of remain and indeed many of them provide anecdotal evidence of adverse economic impact. Just yesterday I was talking with the manufacturing director of a FTSE 250 sized firm. They told me that the analysis they had completed suggested that their firm would take a £2 million hit on profits (around 4%) if we left the EU because of increased regulatory and trade burdens. Their argument was that as part of the world's largest trading block we have relatively free movement of goods and services (as well as people). Leaving the trading block will undoubtedly increase paperwork and red tape! In a separate conversation, with a Managing Director of one of the large banks, I learned that the bank had already seen a downturn in merger and acquisition activity - something they blamed on uncertainty about what will happen to the pound if we decide to exit.

Beyond economics, of course, there is then the argument about migration. Brexit will mean that we take back control of our borders! We can stop people coming to the UK! Yet European countries that agree trade deals with the EU also end up agreeing to the free movement of people! So when the Brexit campaign claim we can have a trade deal agreed with the EU immediately, that will be better than the one we have already - by being within the market - and yet we'll also be able to take back control of our borders, the argument just doesn't stack up.

The two final issues that I have been thinking about are safety and security, and sovereignty. The first of these - safety and security - is pretty clear. Part of the reason for creating the European Union was to seek to create a safer, stronger and more secure Europe. I don't see many people - on either side of the campaign - arguing that the EU has not delivered this. This leaves sovereignty - which I think is actually the strongest argument for Brexit. I can understand those who argue that we should have control over those who create laws for us. That we should be able to vote for EU representatives, but don't we do that by electing members of the European Parliament and asking them to ratify proposals from the EU on our behalf. By engaging with Brussels we gain influence - having representatives there allows us to engage in policy discussions. I can live with a little less direct control and share sovereignty with the rest of Europe, if this delivers the benefits of better and more open trade, increased safety and security and the opportunity to move, live and work freely throughout the EU.

Saturday, 23 January 2016

I've been struck recently by the range of people talking about new digital and data developments in manufacturing. Of particular interest has been the apparent explosion of discussion about industrie 4.0 (which is extremely popular in Germany), internet plus (which is being pushed by China) and the industrial internet (being promoted by GE among others).

Managers, consultants, policy makers and academics are all getting very excited about the potential of connected devices. The basic idea is that increasingly things (of all types) will be stuffed with sensors and connected to the internet. They will stream data back to the original equipment manufacturers who in turn will use sophisticated analytics to analyse and interpret the data. There are loads of examples. Caterpillar streams data back from mining and construction equipment, using this both to monitor the health of individual machines and also to identify ways in which productivity and efficiency might be increased. Rolls Royce monitors aero engines in flight, using sensors to track vibrations in fan blades, which allows them to predict whether or not maintenance is required. In the consumer world - wearable devices (e.g. Nike's fitbit or Garmin's forerunner) track and record exercise levels with the data being uploaded to the internet for benchmarking and comparison purposes.

One thing that I find interesting is the rate at which some of these ideas are developing and the level of interest there is in them. A good way of looking at this is to explore Google Trends, which basically tracks the popularity of search terms and plots these over time. Figure 1 shows a comparison of "industrie 4.0" and the "industrial internet". It neatly shows how effective the German Government and large industrial firms (including Bosch and Siemens) have been at promoting their vision of the future - industrie 4.0 - with a rapid rise of interest in industrie 4.0 since 2012.

One could argue that industrie 4.0 is not a new vision. As Figure 1 also shows there has been interest in the industrial internet for at least a decade and indeed my colleagues at Cambridge IfM, most notably in DIAL (the Distributed Information and Automation Laboratory led by Professor Duncan McFarlane) have been getting our students to build demonstrators and simulations of intelligent factories for years. However, the recent excitement is a testament to the growing maturity of the technology and underlying data infrastructures that will enable a wider adoption of industrie 4.0 and this excitement has driven significant Government and policy interest, as well as research and development investment.

So is industrie 4.0 the answer? Are smart factories where materials and machines seamlessly collaborate to drive productivity and efficiency the future? I think the answer is "yes" and "no". Much of the discussion about industrie 4.0 is still very internally focused - its a factory view of the world. A recent YouTube video illustrates the point. The video talks about a vision of tomorrow - the factory of the future - where machines and materials will use wireless data infrastructures to communicate and coordinate their activities. Yet the examples I started with are ones where the product has left the factory - manufacturers are worrying about how they can track their products once they go out into the field and are used in mines and quarries, on the wings of plans, or in our houses and cars. Here I would argue there is scope for a bigger and more impactful industrial revolution. The fourth industrial revolution will not just be about what happens inside factories, but it will encompass the entire value chain. It will involve remotely monitoring products as they are used in the field. Data will be collected and streamed back to original equipment manufacturers who will use these data to assess the health of assets, to determine whether any maintenance is required, to predict potential product breakdowns and failures. They'll use the data to improve the next generation of design, learning from experience. They'll use the data to look at how the customer's operation might be optimised. By gathering data from multiple machines in a quarry its possible to build a system model of the quarry and identify where bottlenecks lie and hence how productivity can be improved.

This extended view of the fourth industrial revolution won't just be enabled by industrie 4.0, but by the "internet of things" and that's why when you add "internet of things" to the Google Trends data a rather different picture emerges. Its clear that industrie 4.0 and the industrial internet are important component parts, but the real key to driving future success in manufacturing lies beyond the factory walls and this will be enabled by the internet of things.

Sunday, 13 September 2015

In the Cambridge Service Alliance we have
long talked about the importance of focusing on outcomes - understanding deeply
and intimately what it is that your customer or even your customer’s customer
values and exploring how you can deliver this. One of the most powerful
consequences of thinking this way is that it encourages you to change the way
you think about the boundaries of your business.

Take, for example, Caterpillar - what is it
that their customer’s customer values? Imagine, for example a mining operation
or a quarry. Clearly the customer wants a safe working environment. Clearly
they want equipment that is reliable and productive. Clearly they want minimum
disruption to their operations and production schedules. But ultimately what
they want is to be able to extract minerals in the volumes they need at the
lowest cost. If lowest cost per tonne is what the customer wants, what can
Caterpillar do to help their customer achieve this?

Well the first thing is they can recognize
that the mine or quarry is a system - to achieve lowest cost per tonne you have
to optimize the system and get all of the people and equipment working in
harmony together. It is not enough for Caterpillar to be able to guarantee that
their equipment has the lowest operating cost or even lowest total lifetime
cost. Unless Caterpillar’s equipment works in harmony with the rest of the
quarry the customer won’t achieve lowest cost per tonne.

Working in harmony requires coordination -
coordination across mixed fleets of assets and equipment. One of the services
Caterpillar and their Dealers now offer are quarry optimization services. They
use the data coming back off their equipment to help the customer identify
production inefficiencies and lost time. Trucks, for example, have sensors in
their beds. As the truck is loaded with material, the sensors record the weight
of material in the bed of the truck. So Caterpillar knows when trucks are fully
loaded. They also track location, through GPS data, so if your data shows a
truck is fully loaded, but its GPS position is not changing then its not
moving. That’s lost time - once the truck is loaded it should be moving off up
the haul road en route to dump its load in the crusher.

There are loads of similar examples. Bose
thinks of itself not as a speaker manufacturer but as providing sound
distribution systems. Pharmaceutical firms are reinventing themselves as
healthcare solutions provides - seeking to find a new way to complete as the
development cost of drugs increases and more and more drugs come off patent.

At this year’s Cambridge Service Alliance conference - creating value through customer services - scheduled for the 6th
October - we’ll be hearing from three leading providers of services and solutions
- ABB, Rolls Royce and Zoetis. Each of them will be explaining how they have
managed to develop business models - often enabled by data and analytics - to
create value for customers by focusing on the outcomes their customers and
their customer’s customers really want.

Wednesday, 12 August 2015

There's been much debate in recent months about the productivity paradox - put simply there's a long standing concern that technology, particularly information technology, does not seem to deliver the productivity gains that might be expected. This concern has resurfaced in the UK, with the Government raising questions about why the UK's productivity has not grown as much as other countries. In fact George Osborne recently called the UK's low productivity growth "the challenge of our time".

This same topic came up in a recent email discussion with colleagues from ISSIP - the International Society for Service Innovation Professionals. This time prompted by an article in the Wall Street Journal entitled "Silicon Valley Doesn't Believe US Productivity is Down". In essence the Wall Street Journal argument was that developments in technology are not captured in the Government's productivity figures - apps that help people find restaurants more quickly or hail cabs from their phones clearly improve the efficiency with which we can do things. Doing more with less is a classic definition of productivity - so these apps must be improving productivity argues the Wall Street Journal (and those it quotes - including Hal Varian, Google's Chief Economist).

While I accept the argument that apps and associated technologies allow us to do more with less, I think there's a need to unpack the relationship between these developments and measures of productivity more carefully. Traditionally governments have measured labour productivity - in terms of GDP per hour worked. As technology replaces labour, GDP stays the same or increases, while labour hours go down - hence productivity increases.

However, there's an interesting new phenomenon which complicates the picture. Take, for example, Uber. I'm a fan of Uber - the app is great. Its convenient. I've never had a bad service from an Uber driver. I love the fact that I can rate drivers and they can rate customers at the end of journeys. I love the fact that the cost of the ride gets charged to my credit card and the receipt automatically emailed to me. But I also love Uber because it is cheaper - I pay less for a Uber car than I do for a black cab in London. Better service, pleasant drivers, lower prices - what's not to like. Other firms have similar business models - think Amazon or Airbnb. Still others provide me a service for free - Google and TripAdvisor - don't charge me for the information they provide, instead making their money through third parties.

When talking about productivity - or the lack of productivity - we need to think about the economic impact of these cheaper and/or free services. Lower prices to consumers must mean lower GDP. The efficiency gains are there, but they are not being captured in productivity gains because the benefits are being passed on to consumers in the form of lower prices, rather than captured in the official GDP statistics. Maybe a more nuanced discussion about productivity is needed - where we look at both sides of the equation - increases in value and hence GDP - and increases in efficiency reflected in lower costs to consumers.

Friday, 1 May 2015

I’ve just spent a week in China, visiting
the Southern China University of Technology (Guangzhou) and Ceibs, the
international business school in Shanghai. While at Ceibs I participated in the
first seminar on “Servitization and Service Innovation”. Attended by around 100
people, industrial speakers at the seminar included eCoal (an online coal
purchasing platform), HP, Sevalo (a construction and mining equipment services business)
and SKF. While Professors Marjorie Lyles (Indiana University), Chris Voss (Warwick
Business School), Xiande Zhao (Ceibs) and I delivered academic presentations.
It was a great trip, fascinating in so many ways, but I thought I might write a
short blog about some of the themes that came out for me at the seminar. These include:

1.The importance of technology to
China - all the speakers talked about the way technology is changing China’s
approach to business. They talked about all the traditional topics - cloud
computing, big data, mobile, the need for better security. But they also talked
about internet plus, China’s equivalent to Germany’s industrie 4.0 and the rest
of the world’s internet of things. They recognise that as more and more devices
are connected to the net, ever greater volumes of data will be created and
these data can potentially deliver new and valuable business insights if
analysed and interpreted correctly.

2.Platforms were also a major
theme - many of the firms that spoke, including many of those in the audience, were
looking to create platforms, often to combine buying power and/or to utilize
spare capacity. eCoal, for example, has created a coal buying platform which
allows it to drive significant cost savings by pooling purchasing across
multiple organisations. HP claimed to be the world’s biggest retailer of paper.
With their print on demand services, where you pay per page rather than for the
printer, HP is forced to buy large volumes of paper. But with large volumes
comes the opportunity to negotiate discounts for bulk purchasing.

3.One reason so many firms were interested
in platforms was the massive success of China’s three stars of eBusiness - Baidu,
Alibaba and Tencent (the Chinese refer to them as BAT). These three firms
dominate China’s discussion of eBusiness and have all successfully created
platforms, which in turn create multi-sided markets. Tencent, for example,
offers users access to free online games, sells the eyeballs to advertisers,
but also sells the players of games equipment upgrades. A dominant question
underlying many of the comments at the forum, was how do we create platforms
that will allows us to capture multiple, complementary sources of revenue for
our businesses.

4.We also talked about challenges
of servitizing - the fact that having a strong product heritage or brand
sometimes makes it more difficult to offer services. Interestingly a number of
the speakers referred back to the roots of their organisations, obviously
product of their firm’s history, but I wondered whether history also
constrained their thinking about the future. SKF asked some fantastic questions
about servitization. How do we persuade our customers to buy solutions from us
before we have proved their value? Who buys services and solutions? Procurement
is typically not structured that way. It thinks about products and categories,
yet services and solutions often cross multiple products and categories.

5.And finally we talked about
enablers of servitization - what would make the transition to services easier.
Through the course of the seminar I heard five key themes: (i) get inside the
mind of your customer’s customer. Understand what is value to them, so you can
better help your customer create value for their customer; (ii) to understand
you need deep relationships - ask yourself are we really close enough to our
customers; (iii) seek to balance control and collaboration in the ecosystem -
not everyone needs to control or create a ecosystem. Sometimes you have to
accept you are part of one and the best you can do is seek to influence it.
Think about creating win-win-win across the ecosystem to drive change; (iv)
learn from your experience, codify it and share it; and (v) think about
solutions - SKF has created solutions factories where they can work with
customers to solve their problems. Using your own ideas and technology
collaboratively with the customer is a great way of getting inside their minds
and building a deep relationship with them.

One of the great privileges of life as an
academic is the opportunity to travel, to experience different countries and
cultures. I never fail to be inspired when I go somewhere different and meet
someone new. My latest trip to China was no exception.

About Me

Pro-Vice-Chancellor: Enterprise and Business Relations and former Head of the Institute for Manufacturing at Cambridge University. Founding Director of the Cambridge Service Alliance. Specialising in manufacturing and services, especially strategy and performance, business models and analytics.